Catherine has obtained some information from the accountant of ACL, David Qian, who is in charge of the customer performance monitoring as well as the inventory system.

The following table shows data from the customer system concerning the online sales:

Details	2019	2020	2021
Number of customer accounts (000)	780	960	1,150
Customer account with at least one sales order each year	34%	67%	72%
Average sales (value) per customer	$350	$620	$680
Number of customer complaint	83	102	91
Percentage of on-time delivery	98%	89%	92%
Average customer satisfaction overall rating (out of 5 points)	3.00	3.20	3.28

Table 1. Online Customer Performance

Considering the pandemic situation in Malaysia, Catherine feels the performance on online sales has been satisfactory. ‘With the full lockdown for about four months started on 17 March, 2020, I think the sales for 2020 has been quite satisfactory. Overall, there was a growth over the past three years. Even for 2021, despite partial lockdown so far, the sales have continued growing. The average sales per customer have increased so much, from $350 to $680. I would have no doubt that the total sales should have increased by the same proportion. With such kind of performance, we are surely ahead of competition’. Although agree in general, Arumugam warned the board. ‘Although we have managed to improve the sales, I feel that we are not as competitive as other online retail clothing sites. The quality of our customer services has deteriorated’. The board feels that more information is needed in order to understand the customer performance.

In order to catch up with the rest of the online retail sector, Catherine believes that the key step will be to effectively use the vast amount of customer data which the website collects. In a further step forward in the use of information technology at Andaman, she plans to create a data warehouse and use its information to help to achieve the objectives of Andaman. The data warehouse will collect data from customer activities on the website and also, from social media.

Enterprise Resource Planning (ERP) System for ACL

Catherine recently introduced a new enterprise resource planning (ERP) system for ACL. This system will provide a single database, operating across the whole division, to replace systems which have been built up in each function around Andaman’s basic website. The functions, for example, purchasing, warehousing and logistic, and sales and marketing, will now all work on a common technology platform. Her plan is to move more decision making to individual managers of cross-functional teams who will work on all aspects of a given selection of product lines, such as women’s or sports clothing. For example, purchasing will now liaise more closely with sales and marketing in order to ensure that the best possible and most profitable product range is available. It is hoped that this will flatten the organisational hierarchy, hence improving the operational efficiency and reducing non-value-added activities.

Andaman Microchips Ltd (AML)

In 2018, Andaman set up a microchip manufacturing company, Andaman Microchips Ltd (AML) in partnership with Die Spitze AG (Spitze), a renounced microchip manufacturer from Germany. The objective was to reach out to some of Spitze’s key customers in the country, with shorter delivery time and better customer support. The management of Spitze feel that this move was necessary as many microchip manufacturers have either relocated their plants from other South East Asian countries to Malaysia or setting up a new plant in Malaysia. Andaman saw this as an opportunity to venture into high-tech industry. This could be a form of diversification. As Spitze has years of experience in the microchip manufacturing, Andaman has copied Spitze’s quality control systems into its plant. The objective was to accelerate the attainment of quality standards in order to remain competitive. Andaman manufactures microchips based on the product specifications from its customers. These customers are manufacturers of computers and handphones. Although there are different brands, the structure of the microchips for products, e.g., handphones, laptops, etc, could be substantially similar.

1. Based on the information in Table 1 and any relevant information from the case,
   1. comment about the company’ customers’ performance, on a year-to-year basis and the overall trends or performance; 
   2. calculate suitable ratios using the data in Table 1 in order to support your evaluation in (i) above. 
   3. discuss the comments of Catherine and Arumugam concerning customer performance and explain whether you agree with them. Suggest any further information needed before a conclusion about the customer performance can be made.